California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

The Richard H. McKenzie Personal Residence Trust Agreement I and the June S. McKenzie Personal Residence Trust Agreement I (collectively, Trusts) purchased 158.23 acres of unimproved land in Nevada City (the Property) to harvest the timber on the Property and subdivide the Property for resale.*fn1 Defendants Scott and Carol Leonhard (collectively, Agents), who represented the Trusts in the transaction, worked for defendant Eleven Group Incorporated, a real estate broker. Plaintiffs, as trustees of the Trusts, sued the defendants, alleging that the Agents made various false representations to induce the McKenzies to purchase the Property.

Following a bench trial, the trial court found the defendants liable to the Trustees for intentional fraud, negligent misrepresentation, and breach of fiduciary duty. The trial court awarded the Trustees $1,184.77 in damages. The Trustees filed the instant appeal to challenge the trial court's failure to award them (1) the difference between the purchase price and the actual value of the property received and (2) lost profits.

We agree with the trial court that the evidence was insufficient to establish the Trustees' claim for out-of-pocket and lost profit damages. Accordingly, we affirm the judgment.

FACTUAL AND PROCEDURAL HISTORY

The Property

This lawsuit involves a 158.23-acre parcel of unimproved land located on Casci Road, between Highway 20 and Scotts Flat Lake, in Nevada City, California. Casci Road is a dirt road connecting the Property to Highway 20, 1.6 miles to the northeast. Casci Road is paved approximately .80 miles from the Property's western boundary, connecting the Property with Scotts Flat Road to the southwest. Casci Road is maintained by the residents along that road.

The Property was listed for sale on the Multiple Listing Service in March 2004, with a listed sale price of $850,000. At the time of listing, the Property had an approved timber harvest plan and an estimated net timber value of $350,000.

The McKenzie Family

Richard and June owned flower shops and a contracting business before they retired. They had two adult sons, Richard H. McKenzie, Jr. (Rick) and James B. McKenzie, and one adult daughter, Kevil Pelton.*fn2

Rick owned restaurants and worked in the restaurant and catering industry for 40 years. In 2004, Rick managed Cooper's Bar in Nevada City. Although he obtained a real estate salesperson's license during college, Rick never used his license. James made custom furniture for a living and had experience remodeling houses. There is no evidence that Kevil was involved with the purchase of the Property.

June and Rick claimed that they were unsophisticated in real estate matters. June, Rick, and James asserted that the McKenzies relied entirely on the Agents' real estate expertise during the subject transaction.

Defendants

Mimi Hyde Simmons, a broker with more than 24 years experience in real estate sales, owned defendant Eleven Group Incorporated doing business as Cornerstone Realty Group since 1995. Cornerstone held a corporate real estate broker's license issued by the California Department of Real Estate. Long before the transaction giving rise to this litigation, Cornerstone represented Richard and June in the sale of another property. Simmons's parents were long-time acquaintances of Richard and June.

At the time of the transaction at issue in this lawsuit, Cornerstone was the responsible broker for the Agents. Carol was the manager of Cornerstone's Broad Street office, and her husband Scott worked as a real estate salesperson for Cornerstone.

When the Trusts purchased the Property, Carol had been a licensed real estate salesperson for six years. Carol was a certified residential specialist and a member of the Masters Club, signifying her high real estate sales volume.

Scott worked as a licensed forester since 1984. He obtained his real estate salesperson's license in December 2003. Although Scott had been a licensed real estate salesperson for less than one year when he represented the Trusts in their purchase of the Property, Scott had been a partner in entities that had subdivided land and sold lots for residential use. Scott was a long-time acquaintance of Rick and Kevil.

Andreas Theisen's Contract to Purchase the Property

On August 10, 2004, Andreas Theisen, a builder represented by the Agents, made an offer to purchase the Property for $750,000. Theisen intended to subdivide the Property and harvest the timber on the Property for a profit.

Theisen and the sellers entered into a purchase contract in mid-August 2004. On October 11, 2004, Theisen gave the sellers notice that he wished to cancel his purchase contract. Theisen did not want to proceed with his escrow because he determined that the costs of subdividing the Property, including the cost to improve Casci Road, would exceed the value of the resulting lots.

From October 11, 2004, to October 14, 2004, Carol worked with the sellers' agent to get the sellers to agree to cancel Theisen's contract and to return Theisen's deposit. The sellers agreed to cancel Theisen's contract and to release his deposit on October 18, 2004, four days after Richard and June submitted their offer to purchase the Property.

The McKenzie Family's Introduction to the Property

Sometime in 2004, Scott told Rick about the Property, describing it as a "beautiful piece of property" with "quite a bit of timber on it." Scott told Rick that the Property was under contract at the time. According to Dee Vee Brown, a mutual friend who was present during the conversation, Scott represented that the Property could be subdivided. Rick told Scott his parents would be interested in investing in similar properties.

A few months later, Scott told Rick the Property was available. According to Rick and Brown, Rick asked Scott on that occasion whether the Property could be subdivided and Scott answered affirmatively. Rick then told his parents about the Property. Scott showed the Property twice to various members of the McKenzie family before Richard and June made their purchase offer.

The McKenzies' Intended Use for the Property

The McKenzies did not intend to live on the Property. They intended to subdivide the Property and sell the resulting lots for a profit. They intended to sell the timber on the Property to pay for the subdivision costs. Scott understood that the McKenzies were interested in buying the Property to make a profit from logging and selling the subdivided lots.

June testified that she and Richard anticipated making over $1 million in profits from the Property. Rick claimed that he and his father projected profits of $800,000 to $1.2 million from the sale of timber and the subdivided lots.

The Agents' Fraudulent Representations

The evidence the Trustees presented at trial showed that, before Richard and June made their purchase offer, Scott and/or Carol represented that the man who was supposed to buy the Property (Theisen) cancelled his escrow because he was too busy, other parties were interested in buying the Property, Casci Road was a public road, subdividing the Property would be a "slam dunk" and Casci Road could be improved without a problem. The evidence adduced at trial showed that the Agents' representations were false.

The Agents' Representations about Future Property Value

June and James asserted that Scott or Carol told them that, following subdivision, the lots would sell for about $550,000 to $650,000. James testified that Scott claimed the $550,000 to $650,000 price was based on the advertised price of a property in the area. According to Rick, when he asked Scott what five 30-acre lots in the area would be worth, Scott responded that such lots would be worth $550,000 to $650,000. Rick and James testified that Scott stated the McKenzies had to "put in a road, perc and mantle and wells, and bring power to the property" to command a $550,000 to $650,000 sale price.

Rick subsequently testified that the Agents' statements to him about property value related to the value of the lots as of October 2004, as opposed to the future value of the lots. Trustees' special interrogatory response, which was verified by Rick, James, and Kevil, stated the Agents represented that the lots would sell for a minimum of $500,000 to $600,000.

Scott denied that he and Carol stated the subdivided lots could sell for $550,000 to $650,000, but admitted he may have discussed the probable value of the subdivided lots with the McKenzies before the close of escrow. Scott further testified that after the close of escrow he told the McKenzies a neighboring property had sold for $650,000 because it had a lake view. According to Scott, this was the only time he spoke to the McKenzies about a $650,000 property value. Carol testified that no one made any representations about the value of the Property.

Although there is conflicting testimony about whether the Agents made representations about the value of the subdivided lots, James admitted that Scott's statement about future property value was a "guess" and would depend on a healthy real estate market. Rick similarly admitted that a real estate agent's statement about property value was not a guarantee.

The Road Letter

Before the close of escrow, Scott provided the McKenzies with a copy of what the parties refer to as the "Road Letter" to help the McKenzies determine whether subdividing the Property would be profitable. The Road Letter is dated October 17, 2004. The letter shows bids to improve Casci Road that Theisen obtained during his escrow period. Theisen obtained the bids to improve Casci Road because such work was required to subdivide the Property. The Road Letter states:

"The following costs estimates for the road construction project for Casci Road are based on improvement criteria recently provided by the Planning Department, County of Nevada. [¶] The county criteria include widening of the road to 20' with turnouts every 500 feet. Pavement would extend from the end of the existing pavement near Scotts Flat Lake, into the property, a distance of approximately six tenths of a mile. The placement of pavement requires a 6" base of aggregate, vibratory rolled until reaching suitable compaction. The pavement depth was bid at a depth of 4". [¶] Further, a safe fire escape route from the property to Highway 20 (also 20' wide) would require gravel to a depth of 6" however, pavement would also be mandatory on grades exceeding 10% from the property to Highway 20. [¶] Approximate bids are as follows per discussion with said companies: [¶] Bid from Robinson Enterprises, Inc. [(Robinson Enterprises)] $1,300,000.00 [¶] Bid from Hansen Bros. $800,000.00 [¶] Note: Unusually large discrepancy between bids indicates possible design spec. difference."

There is no evidence of a written bid or contract from either Robinson Enterprises or Hansen Bros. There is nothing in the record showing that either Robinson Enterprises or Hansen Bros. provided a writing describing the scope of its bid.

The McKenzies' Purchase Contract

The McKenzies believed the Agents' representations that the Property could be subdivided. They believed the Property was a "great deal."

Richard and June were scheduled to leave for a month-long European cruise, but they wanted to make an offer before they returned from vacation because the Agents had represented that there were other interested buyers. Accordingly, on September 29, 2004, Richard and June signed powers of attorney authorizing Rick to make an offer to purchase the Property on Richard's and June's behalf. Richard and June left for vacation on October 10, 2004.

On October 14, 2004, three days after Theisen had requested cancellation of his contract, Rick signed an offer to purchase the Property for $813,500 on his parents' behalf. The McKenzies' offer was higher than Theisen's. According to Rick, Carol advised him not to offer less than Theisen because other parties were interested in the Property.

After a counter offer from the sellers, the McKenzies and the sellers entered into a purchase contract sometime between October 16 and 18, 2004.

Richard and June returned from vacation on November 9, 2004. Escrow closed on November 19, 2004. The Trusts purchased the Property for $813,500. The Trusts took title to the Property. The Agents each received about $12,000 in commissions from the sale.

Revenue from Timber Sales

In late spring or summer 2005, Scott acted as the licensed forester for the Trusts when timber from the Property was harvested. The Trusts received approximately $383,000 in net proceeds from timber sales.

The McKenzie Family's Efforts to Subdivide the Property

Andrew Cassano, a professional land surveyor, was retained to help the McKenzies subdivide the Property. In August 2006, Cassano submitted their "Request for Pre-Application Review" to the Nevada County Community Development Agency, Planning Department, to obtain approval to subdivide the Property and two neighboring properties. The preapplication requested an exception from compliance with full county standards for improving Casci Road and the use of Scotts Flat Road as the primary access route to the applicants' properties.

Nevada City decided to use Highway 20, not Scotts Flat Road, as the primary access route to the proposed subdivided lots. Nevada County required the applicants to either obtain easement deeds from all property owners along Casci Road to the north of the Property or a court judgment establishing a prescriptive right in favor of the applicants' properties for the same portion of Casci Road. There are approximately 34 parcels to the north of the Property along Casci Road. Joseph Bartle, an expert on title records, testified that there were no recorded easements in favor of the Property along Casci Road. As of September 15, 2006, no easements had been obtained from the neighboring property owners.*fn3

The County's and City's response to the preapplication ended the Trusts' plans to subdivide the Property. When they determined that subdivision was impracticable, the McKenzies decided to sell the Property. The McKenzies sold the Property in early June 2007 for $687,500, $126,000 less than the purchase price.

The Complaint

The Trustees filed a complaint against the Agents and Cornerstone, alleging causes of action for intentional fraud, negligent misrepresentation, and breach of fiduciary duty. The complaint was filed in Sacramento County and then transferred to Nevada County.

Court Trial

The case was tried by the court. On the issue of property value, the parties stipulated that the Trustees' expert Daniel Ketcham was qualified to testify about the value of real property. Ketcham opined that, assuming the Property could not be subdivided, it was worth $600,000 as of November 2004. Ketcham's appraisal report was not made a part of the record on appeal.

Ketcham viewed the Property in April 2009. He admitted that he did not know that the Property had been logged after November 2004 and the McKenzies had received about $380,000 in net revenue from timber sales. In appraising the Property, Ketcham did not consider the value of the timber that was on the Property. Ketcham admitted that the existence of an approved timber harvest plan and a reliable estimate of net timber revenue would have affected his opinion about the value of the Property as of November 2004.

At trial, the defendants objected to Ketcham's testimony on the ground that the Trustees failed to disclose in their special interrogatory response dated December 28, 2007, that the Trustees sought to recover damages based on the difference between the purchase price and the market value of the Property at the time of purchase. Contrary to the Trustees' contention, the trial court did not exclude Ketcham's testimony based on the Trustees' special interrogatory response. The trial court allowed Ketcham to give his opinion on market value.

The trial court issued its tentative decision on July 30, 2009. The Trustees requested a statement of decision.

On November 4, 2009, the trial court filed its statement of decision. The trial court found the defendants liable to the Trustees on all counts. In particular, the trial court found that Scott made the following misrepresentations to Rick: (1) Theisen withdrew his contract because he was too busy; (2) if the McKenzies wanted to purchase the Property they had to move quickly because there were other interested buyers; (3) there would be no problems in subdividing the Property; and (4) Casci Road is a county road. The trial court found that Carol repeated the misrepresentation to Rick that there were other persons interested in buying the Property.

The trial court awarded the Trustees the costs incurred in attempting to subdivide the Property -- $1,184.77 -- plus interest. The trial court did not award the Trustees the difference between the purchase price and the actual value of the Property on the date of purchase because it found that the Trustees failed to establish that the actual value of the Property was less than the purchase price. The court also did not award damages for lost profits because it found the Trustees' evidence insufficient to establish the cost they would have incurred to improve Casci Road.

Judgment was entered on November 25, 2009. Notice of entry of judgment was filed on January 19, 2010. The Trustees filed a notice of appeal on March 1, 2010.

DISCUSSION

I. Failure to Move for a New Trial

Defendants contend that the Trustees are in effect complaining that the trial court's damages award is inadequate. Defendants maintain that the Trustees waived the right to appeal the inadequacy of the trial court's damages award by failing to move for a new trial. The record does not show the filing of a new trial motion on the issue of damages.

Regardless of whether the case was tried by a jury or by the court, failure to move for a new trial on the ground of inadequate damages precludes such challenge on appeal if the challenge turns on the credibility of witnesses, conflicting evidence, or other factual questions. (Code Civ. Proc., § 657, subd. (5); County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1121 (Southern Cal. Edison Co.).) This is because the power to weigh the evidence and resolve issues of credibility is vested in the trial court, not the reviewing court. (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 759.) In contrast, the failure to move for a new trial does not preclude an appeal on the issue of damages where the appeal is based on a matter of law such as erroneous evidentiary rulings, instructional errors or failure to apply the proper measure of damages. (Ibid.)

The value of real property is a question of fact. (Southern Cal. Edison Co., supra, 112 Cal.App.4th at p. 1121.) The application of an appropriate appraisal method is also a factual question. (Ibid.) When challenging the amount of damages awarded, questions about whether an item constitutes a valuable asset and whether a condition is a factor affecting property value are factual questions that must be raised in a new trial motion. (Id. at pp. 1121-1122.) On the other hand, the question of whether it was proper for the trial court to deny recovery for certain expenditures by the plaintiff in calculating damages may be raised on appeal without the prerequisite of filing a new trial motion. (Mendoyama, Inc. v. County of Mendocino (1970) 8 Cal.App.3d 873, 878.)

The present appeal raises legal and factual questions. The question of whether the Road Letter fraudulently attributed certain characteristics to the Property is a factual question that requires the weighing of evidence. (Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 132 [where evidence on the issue of fraud is conflicting, it is for the trial court to pass on the credibility of the witnesses and to determine the weight to be given their testimony].) The question of whether the trial court's determination that the Trustees were required to prove the cost of improving the road applied an erroneous legal standard and whether the post-transaction timber sales are not properly included in the computation of actual value are two legal issues raised in the briefs.

While the Trustees' failure to bring a new trial motion on factual issues precludes an appeal based thereon, the legal issues are not precluded on appeal. As we discuss below, we affirm the trial court's judgment because we find that the Trustees failed to present sufficient evidence to establish their claim for out-of-pocket and net lost profit damages.

"(a) One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction, including any of the following: [¶] . . . [¶] (4) Where the defrauded party has been induced by reason of the fraud to purchase or otherwise acquire the property in question, an amount which will compensate him for any loss of profits or other gains which were reasonably anticipated and would have been earned by him from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud, provided that lost profits from the use or sale of the property shall be recoverable only if and only to the extent that all of the following apply: [¶] (i) The defrauded party acquired the property for the purpose of using or reselling it for a profit. [¶] (ii) The defrauded party reasonably relied on the fraud in entering into the transaction and in anticipating profits from the subsequent use or sale of the property. [¶] (iii) Any loss of profits for which damages are sought under this paragraph have been proximately caused by the fraud and the defrauded party's reliance on it. [¶] (b) Nothing in this section shall do either of the following: [¶] (1) Permit the defrauded person to recover any amount measured by the difference between the value of property as represented and the actual value thereof."

When it amended section 3343 in 1971, the Legislature specifically provided that in a case involving fraud in the sale of property the plaintiff is limited to out-of-pocket damages. (§ 3343, subd. (b)(1); Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1240-1241 (Alliance Mortgage Co.).) The out-of-pocket measure of damages "is directed to restoring the plaintiff to the financial position enjoyed by him [or her] prior to the fraudulent transaction, and thus awards the difference in actual value at the time of the transaction between what the plaintiff gave and what he [or she] received." (Alliance Mortgage Co., supra, 10 Cal.4th at p. 1240.)

The California Supreme Court has stated in dicta that section 3343 does not apply when the plaintiff is defrauded by a fiduciary. (Alliance Mortgage Co., supra, 10 Cal.4th at pp. 1241, 1250; Stout v. Turney (1978) 22 Cal.3d 718, 725-726.) In such case, the "'broader' measure of damages provided by sections 1709 and 3333 applies." (Alliance Mortgage Co., supra, 10 Cal.4th at p. 1241, fns. omitted; Stout v. Turney, supra, 22 Cal.3d at pp. 725-726.) The broader measure of damages provides for compensation for damages suffered as a result of the fraud (section 1709*fn5 ) and damages for all the detriment (anticipated or not) proximately caused by the breach of the obligation (section 3333*fn6 ).

The present case involves fraud by fiduciaries. However, the parties address only the section 3343 measure of damages in their briefs. The parties make no mention of a measure of damages under section 1709 or section 3333. Thus, any argument that section 1709 or 3333 applies to the measure of damages has been forfeited. (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) As a result, we analyze this case under section 3343. In any event, the evidence is not sufficient to award the out-of-pocket losses or net lost profits the Trustees claimed.

III. Sufficiency of the Evidence of out-of-pocket Losses

Under section 3343, subdivision (a), the Trustees are entitled to recover the difference between the actual value of that with which they parted and the actual value of what they received. (§ 3343, subd. (a).) The Trustees bear the burden of establishing the actual value of what they received. (Nece v. Bennett (1963) 212 Cal.App.2d 494, 497.) The term "actual value" in section 3343 means market value. (Bagdasarian v. Gragnon (1948) 31 Cal.2d 744, 753-754.) Market value is determined as of the date of purchase. (McCue v. Bruce Enterprises, Inc. (1964) 228 Cal.App.2d 21, 31.)

The market value of property may be shown by a qualified expert's opinion. (Evid. Code, § 813, subd. (a).) A trial court must independently examine an expert's conclusion. (In re Marriage of Micalizio (1988) 199 Cal.App.3d 662, 673 (Micalizio).) The value of an expert's conclusion rests in the factors considered and the reasoning employed. (Pacific Gas & Electric Co. v. Zuckerman (1987) 189 Cal.App.3d 1113, 1135.) Where an expert bases his or her conclusion upon assumptions that are not supported by the record, his or her conclusion has no evidentiary value. (Ibid.) In such case, "the expert's opinion cannot rise to the dignity of substantial evidence" and the trial court may not rely on the expert's conclusion. (Ibid.; Micalizio, supra, 199 Cal.App.3d at pp. 673-675; Ellwood v. Niedermeyer (1936) 12 Cal.App.2d 699, 708.)

In Micalizio, the appellate court reversed the trial court's judgment about the value of stock in a closely held corporation. (Micalizio, supra, 199 Cal.App.3d at pp. 673-677.) The appellate court held that it was improper for the trial court to accept valuation testimony that failed to consider all the relevant factors that established the value of the appellant's minority shares. (Id. at p. 673.) In particular, the witness upon whose testimony the trial judge based valuation failed to consider that the appellant owned a minority block of shares and that such shares were subject to a restrictive agreement limiting the appellant's ability to sell his stock and the price he could obtain for his shares. (Id. at p. 674.)

In Ellwood v. Niedermeyer, supra, 12 Cal.App.2d 699, the appellate court concluded that the trial court erred in relying upon the testimony of an expert whose appraisal assumed an unencumbered property when the property had a $25,000 mortgage. (Id. at p. 708.)

Here, the trial court did not rely on Ketcham's appraisal of property value as of the date of purchase because Ketcham failed to appraise the Property in its condition at the date of purchase. The trial court found that Ketcham failed to appraise the Property with timber on it. The trial court further noted that Ketcham's appraisal of $600,000 plus the $380,000 in net timber revenue exceeds the purchase price of $813,500. We conclude that the trial court did not err in rejecting Ketcham's appraisal.

It was undisputed that timber was a material feature and asset of the Property. Scott testified that timber revenue was "an important reflection of a huge value on the property." The McKenzies purchased the Property partly because of the timber on it. They intended to profit from timber sales and to use such profits to defray the cost of subdivision.

Ketcham appraised the value of the Property, assuming the Property could not be subdivided, as of the month the McKenzie Trusts' escrow closed, November 2004. As of November 2004, the timber on the Property had not been harvested. Ketcham did not know that the Property was logged after November 2004. Accordingly, in appraising the Property, Ketcham did not consider the substantial value of the timber on the Property. Ketcham admitted that the existence of an approved timber harvest plan and a reliable estimate of net timber proceeds would have affected his opinion about the value of the Property as of November 2004. Ketcham did not offer an opinion about the market value of the Property with timber.

Additionally, although Ketcham testified that his opinion was based on comparable sales, there is no evidence in the record on appeal that any of the properties Ketcham used as comparables had an approved timber harvest plan and timber that would generate an estimated net sales proceeds of $383,000. Property cannot be considered comparable when it does not include material features that the subject property includes. (Pacific Gas & Electric Co. v. Zuckerman, supra, 189 Cal.App.3d at p. 1130.)

Citing Hancock v. Williams (1950) 99 Cal.App.2d 80 (Hancock), the Trustees argue that the trial court erred in rejecting Ketcham's opinion based on timber revenue from a postpurchase contract with a third party. Hancock does not help the Trustees. In Hancock, the trial court found the defendants liable for fraudulently inducing the plaintiffs to purchase certain real property. (Hancock, supra, 99 Cal.App.2d at p. 81.) The plaintiffs paid $50,000 for the property and sold it for $42,000. (Ibid.) The $50,000 purchase price consisted in part of the plaintiffs' assumption of existent first and second trust deeds. (Id. at pp. 81-82.) The trial court awarded the plaintiffs $8,000 in damages, representing the difference between the $50,000 purchase price and what the court determined was the actual value of the property the plaintiffs received ($42,000). (Id. at p. 82.)

On appeal, the defendants in Hancock argued that the amount of damages should have been reduced by $3,500 because the plaintiffs received a $3,500 discount when they paid off the second trust deed. (Hancock, supra, 99 Cal.App.2d at pp. 81-82.) According to the defendants, the plaintiffs were never out of pocket the $3,500. (Id. at p. 82.) Applying section 3343, the appellate court held that the discount the plaintiffs obtained on the second trust deed did not reduce the consideration they paid for the property. (Ibid.) The appellate court explained that the plaintiffs' damages were to be assessed as of the date of the fraudulent transaction and plaintiffs were clearly obligated to pay the full amount of the second trust deed. (Ibid.)

The Hancock court's focus on damages as of the date of the fraudulent transaction is instructive. (Hancock, supra, 99 Cal.App.2d 80.) As we have discussed, Ketcham failed to consider the condition of the Property as of the date of the fraudulent transaction. Because Ketcham's valuation opinion did not consider an indisputably important feature of the Property as of November 2004, it was insufficient evidence to establish the actual value of the Property as of the date of purchase. (Micalizio, supra, 199 Cal.App.3d at pp. 673-675; Ellwood v. Niedermeyer, supra, 12 Cal.App.2d at p. 708.) The Trustees do not point us to anywhere in the record that shows the actual value of the Property in its condition as of the date of purchase. (Miller v. Superior Court (2002) 101 Cal.App.4th 728, 743 [failure to cite to the record waives the claim of error].) If the actual value of the property received cannot be determined, it cannot be concluded that the purchase price exceeded the actual value of the Property as of the date of purchase. For this reason, we affirm the judgment.

IV. Sufficiency of the Evidence of Net Lost Profits

A plaintiff may recover consequential damages such as lost profits under section 3343 even where no out-of-pocket loss is established. (Stout v. Turney, supra, 22 Cal.3d at pp. 729-730.) Lost profits that were reasonably anticipated and would have been earned by the plaintiff from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud are recoverable as consequential damages under section 3343, subdivision (a)(4), provided that the conditions set forth in section 3343, subdivision (a)(4)(i)-(iii), are satisfied. (§ 3343, subd. (a)(4); Hartman v. Shell Oil Co. (1977) 68 Cal.App.3d 240, 247.) There is no contention that the Trustees did not satisfy the section 3343, subdivision (a)(4)(i)-(iii), conditions. The question before us on appeal is whether the trial court erred in finding that the Trustees did not establish that they suffered lost profits.

The trial court found that in order to prove lost profits, the Trustees had to prove the amount they would have received in selling the subdivided lots and the cost of subdividing the Property. The trial court found no evidence to establish that Scott's statement that 30-acre lots in the area were selling for $500,000 to $600,000 was false. The court stated that if such statement referred to the future value of the subdivided lots, it was an opinion and not actionable fraud.

We need not determine whether Scott's statement about property value constitutes fraud. Regardless of whether such statement falsely attributed a characteristic to the Property (i.e., that the resulting lots would sell for $550,000 to $650,000) as the Trustees contend, they had to prove that they suffered net lost profits because of the defendants' fraud. As we explain, they failed to do so.

The trial court concluded that the Trustees could not rely on the Road Letter to prove that it would have cost $800,000 to improve Casci Road to county standards. The trial court stated that it had admitted the Road Letter for the limited purpose of showing the Agents' representations. Further, the trial court noted that the Road Letter shows on its face that the Robinson Enterprises and Hansen Bros. bids did not meet county standards. Based on the above, the trial court found that the Trustees failed to prove the costs they would have incurred to subdivide the Property.

Initially, we observe that contrary to the Trustees' claim, the record supports the assertion in the trial court's statement of decision that the defendants' objection to the use of the Road Letter to establish the cost of improving Casci Road had been sustained on hearsay grounds. The trial court's ruling was proper. (Kitchel v. Acree (1963) 216 Cal.App.2d 119, 125.)

The Trustees contend that the trial court erred in requiring them to prove the cost of improving Casci Road. We disagree with the Trustees. "It is fundamental that in awarding damages for the loss of profits, net profits, not gross profits, are the proper measure of recovery." (Kuffel v. Seaside Oil Co. (1970) 11 Cal.App.3d 354, 366.) "'Net profits are the gains made from sales "after deducting the value of the labor, materials, rents, and all expenses, together with the interest of the capital employed."'" (Gerwin v. Southeastern Cal. Assn. of Seventh Day Adventists (1971) 14 Cal.App.3d 209, 223.) Costs that would have been incurred by the plaintiff even if the property had been as represented are not recoverable. (Walters v. Marler, supra, 83 Cal.App.3d at p. 26.) In other words, to recover lost profit damages, the Trustees had to prove that any gross revenues from the sale of the subdivided lots would exceed the typical costs of subdividing the Property.

The Trustees do not contend that Casci Road had to be improved because of the Agents' fraud. Rick and James acknowledged that Casci Road had to be improved in order to subdivide the Property. Because the Trustees would have incurred costs to improve Casci Road regardless of the Agents' misrepresentations, the Trustees are not entitled to recover such costs. (Walters v. Marler, supra, 83 Cal.App.3d at p. 26.) Road improvement costs must be deducted from any anticipated gross sales revenues.

Even if the Road Letter could be admitted to prove road improvement costs, substantial evidence supports the trial court's conclusion that the Road Letter did not establish the cost of improving Casci Road. Scott testified that the bids by Robinson Enterprises and Hansen Bros. were not guarantees as to what it would actually cost to improve Casci Road. Rick similarly stated that the $800,000 bid in the Road Letter was not a firm number. As for the bid from Robinson Enterprises, Theisen testified that such bid was given "[j]ust shooting from the hip" at a "very preliminary meeting" and was not based on any "plan that shows the road with its elevations and everything else."

The Trustees failed to establish the scope of the Robinson Enterprises and Hansen Bros. bids. The Road Letter shows a bid of $1.3 million from Robinson Enterprises and a bid of $800,000 from Hansen Bros. The Road Letter states that the "[u]nusually large discrepancy" between the two bids indicates a possible design specification difference. Scott testified that he was not involved in obtaining the Hansen Bros. bid and did not know what portion of Casci Road it included. We have not been directed to any evidence showing what the Robinson Enterprises bid actually encompassed. Rick testified that he believed the Road Letter covered the costs for road improvements from Highway 20 to the southern end of the Property line and did not cover the portion of Casci Road that runs south of the Property, but he admitted that he did not know the design specifications for the Robinson Enterprises and Hansen Bros. bids.

The record supports the trial court's finding that, on its face, the Road Letter shows that the Robinson Enterprises and Hansen Bros. bids did not meet county standards. The Road Letter states, "[t]he placement of pavement requires a 6" base of aggregate," but the "pavement depth" was bid at a depth of four inches. We have not been directed to any evidence explaining the difference, if any, between aggregate base and "pavement depth." Cassano testified that depending on soil conditions, the county may accept four inches of aggregate base. There is no evidence about whether the soil conditions along Casci Road permitted a four-inch aggregate base or that the county had approved a four-inch aggregate base in this case. Rick testified that he could not conclude from the Road Letter whether the bids from Robinson Enterprises and Hansen Bros. met county standards. Neither can we.

The Trustees contend that the true cost of improving Casci Road is $1,857,000. This claim is based on the stipulation at trial that if called as a witness, the Agents' witness Michael Seghezzi would testify that in 2006, it cost $1,857,000 to improve Casci Road, from Highway 20 to Scotts Flat Lake, to county standards based on the written estimate by Seghezzi Enterprises. The Trustees did not raise this argument below. We do not consider arguments raised for the first time on appeal. (Blankenship v. Allstate Ins. Co. (2010) 186 Cal.App.4th 87, 105.) Nevertheless, even if $1,857,000 was the cost to improve Casci Road, there was evidence at trial that the Trustees would have incurred other costs to subdivide the Property and we were not directed to any evidence in the record establishing the amount of such costs.

Because the Trustees failed to prove the amount of costs admittedly required to subdivide the Property, it cannot be concluded that any revenue to be derived from the sale of the subdivided lots would exceed the amount of the subdivision costs. Accordingly, we affirm the trial court's judgment that the evidence was insufficient to sustain a judgment for net lost profits in the Trustees' favor.

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